We’re almost through the first quarter of the year which can seem like a perfect time to take stock of what’s happened over the past three months, and to plan, prepare and roll with the current market activity we’re all seeing. The good news for advisers is that the pre-eminent role of the intermediary within the mortgage market remains in place, and for the foreseeable future it looks likely to stay that way.
I was reminded of this while watching the TV recently. I’m not sure if you watch the Channel 4 comedy ‘Catastrophe’ – which is excellent if you like a show which is brutally honest about relationships and parenthood – but in last week’s episode the main male character, Rob, wanted to find out if they were eligible for a new mortgage. There was a scene of him going into and coming out of his bank branch, where he sat on the kerb, nearly got run over and we found out later his bank manager had said they weren’t eligible for a new loan.
Now, while admittedly this is a fictional comedy, I couldn’t help but watch and think, ‘Why are you going to your bank instead of an adviser?’ This probably wasn’t the writers’ major concern I understand, because they obviously wanted to get the couple to a plot point where they didn’t have the money to buy a new home, but the industry nerd inside of me sat there and thought, ‘I bet an adviser would be able to help’.
And that’s the reality of the market we have at the moment – competition is strong, product choice is growing, and with that comes greater complexity and therefore the need for professional advice grows ever larger. In this environment, we are constantly working with our firms to ensure they make the most of this situation and ensure they place themselves firmly in the shop window when it comes to both existing and prospective customers. Because one of the major facts of industry life at the moment is that competition amongst adviser firms is growing, as more new entrants (particularly digital offerings) recognise the growth potential in our market.
Interestingly, the latest statistics from IMLA, appear to show an intermediary sector which is much more adept at facilitating business enquiries, and no doubt turning those into new clients and written business. Its latest stats, for the last quarter of 2016, show that the average number of mortgage enquiries received by intermediaries rose by 26% from the previous quarter, up to 58 enquiries from 46 in Q3.
Interestingly, this data comes from tracking the customer journey, so it’s the client’s themselves who are revealing where they go for their advice. Clearly, the move towards intermediary advice continues to go in the right direction – as far as we’re concerned – and there is a lot of powerful messaging to be utilised by firms here in terms of independence, professional advice, lender/product choice, taking the burden of application, the protections afforded by advice, confidence, suitability, affordability, the list goes on and on.
I sometimes think that we, in this industry, forget the full benefits of the service we currently offer, especially in a post-MMR, post-MCD, post-PRA underwriting changes, post-stamp duty increases, etc, world. Everything happening from a market/product/regulatory/economic perspective, should point the way even more firmly towards the use of a mortgage intermediary, and we as practitioners should not shy away from telling the public this in no uncertain terms.
Plus of course, we should be focused on moving those ‘Catastrophe couples’ away from their ‘my bank or nothing’ mindset. How many clients have you been able to help who initially went to their own bank and were turned down? I suspect plenty and it’s your knowledge and expertise that have made these mortgage/loans happen – that’s an incredibly powerful message to be sending out, at a time when many people will be feeling uncertain about a whole host of things in their life, and where the media ‘mood music’ can suggest that client’s circumstances could make them a mortgage prisoner for life.
You know better – let’s make sure those prospective (and existing) clients know the same.
Paul Nye is director of business partnerships at Stonebridge Group